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SMM Daily Review - 2011/8/26 Copper Market
Aug 29,2011 10:02CST
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Source:SMM
As LME copper prices surged on the previous trading day, SHFE 1111 copper contract prices, the most active one, opened up RMB 500/mt at RMB 67,300/mt on Friday.

SHANGHAI, Aug. 29 (SMM) –As LME copper prices surged on the previous trading day, SHFE 1111 copper contract prices, the most active one, opened up RMB 500/mt at RMB 67,300/mt on Friday. After opening, SHFE three-month copper contract prices narrowly fluctuated around the daily moving average, and met resistance during major trading hours. As a result, SHFE three-month copper contract prices fell below RMB 67,000/mt, falling to a low RMB 66,820/mt. In the afternoon session, as LME copper prices tried to move toward USD 9,000/mt due to a slump in the US dollar, SHFE three-month copper contract prices touched an intraday high of RMB 67,570/mt. Finally, SHFE 1111 copper contract prices closed at RMB 67,440/mt, up RMB 640/mt or a gain of 0.96%. Positions for SHFE 1111 copper contracts were down 3,604 lots, while trading volumes were up 41,492 lots. Despite a high close, SHFE three-month copper contract prices were expected to fluctuate further, as long investors were awaiting the Fed chairman Ben Bernanke’s speech at the central bank's symposium on Friday evening.

In spot markets, copper premiums declined to positive RMB 0-120/mt, as imported copper increased, although SHFE copper prices fell from highs. Trade prices for standard-quality copper were between RMB 67,050-67,200/mt in the morning business, and RMB 67,100-67,300/mt for high-quality copper. Some speculators participated in the market due to short-term bets on QE3 in the US and low premiums, and transactions were mainly made at low prices. As a result, market oversupply remained. SHFE copper prices regained momentum, and copper premiums dropped again. In this context, offers for standard-quality copper experienced discounts levels, while offers for high-quality copper were only premiums of positive RMB 0/mt. Traded prices increased to RMB 67,100-67,350/mt, depressing buying interest, and resulting in limited market transactions. Copper inventories monitored by the Shanghai Future Exchange (SHFE) were down 9,756 mt to 102,258 mt in the week ended August 26th. Downstream producers made purchases on an as-needed basis, but increased purchasing volumes. Due to the approach of the month-end, cargo-holders were more eager to move goods, keeping market oversupply available. Spot copper offers remained discounts levels, and downstream producers were still confronted with tight cash flows.



 

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